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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. A period of time too short to change the size of the plant - but many other - more variable resources can be changed to meet demand






2. The mechanism for combining production resources - with existing technology - into finished goods and services






3. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






4. The total quantity - or total output of a good produced at each quantity of labor employed






5. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






6. A per unit tax on production results in a vertical shift in the supply curve by the amount of the tax






7. Occurs when LRAC is constant over a variety of plant sizes






8. Two goods are consumer complements if they provide more utility when consumed together than when consumed separately






9. The most desirable alternative given up as the result of a decision






10. TR = P * Qd






11. Ex -y = (%dQd good X) / (%d Price Y). If Ex -y > 0 - goods X and Y are substitutes. If Ex -y < 0 - goods X and Y are complementary






12. A market structure characterized by a few small firms producing a differentiated product with easy entry into the market






13. Production inputs that the firm can adjust in the short run to meet changes in demand for their output. Often this is labor and/or raw materials






14. The difference between total revenue and total explicit and implicit costs






15. Total product divided by labor employed. APL = TPL/L






16. The upward part of the LRAC curve where LRAC rises as plant size increases. This is usually the result of the increased difficulty of managing larger firms - which results in lost efficiency and rising per unit costs.






17. A good for which higher income decreases demand






18. When firms focus their resources on production of goods for which they have comparative advantage






19. Ed > 1 - meaning consumers are price sensitive






20. The philosophy that a citizen should receive a share of economic resources proportional to the marginal revenue product of his or her productivity






21. The practice of selling essentially the same good to different groups of consumers at different prices






22. Es = (%dQs) / (%dPrice)






23. ATC = TC/Q = AFC + AVC






24. The rational decision maker chooses an action if MB = MC






25. The change in quantity demanded resulting from a change in the price of one good relative to other goods






26. Ed = 0 - no response to price change






27. Excess demand; a shortage exists at a market price when the quantity demanded exceeds the quantity supplied






28. Models where firms are competitive rivals seeking to gain at the expense of their rivals






29. Substitutes - cost as percentage of income - and time to adjust to price changes all influence price elasticity






30. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






31. Exists if a producer can produce a good at lower opportunity cost than all other producers






32. Entry of new firms shifts the cost curves for all firms downward






33. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






34. The downward part of the LRAC curve where LRAC falls as plan size increases. This is the result of specialization - lower cost of inputs - or other efficiencies of larger scale.






35. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






36. The marginal utility from consumption of more and more of that item falls over time






37. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






38. A good for which higher income increases demand






39. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






40. Ed = (%dQd)/(%dP). Ignore negative sign






41. The ability to set the price above the perfectly competitive level






42. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






43. A period of time long enough to alter the plant size. New firms can enter the industry and existing firms can liquidate and exit






44. The proportion of the tax paid by the consumers in the form of a higher price for the taxed good is greater if demand for the good is inelastic and supply is elastic






45. Characterized by many small price-taking firms producing a standardized product in an industry in which there are no barriers to entry or exit






46. Production of the combination of goods and services that provides the most net benefit to society. The optimal quantity of a good is achieved when the MB = MC of the next unit and only occurs at one point on the PPF






47. Two goods are consumer substitutes if they provide essentially the same utility to consumers






48. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






49. Indirect - non-purchased - or opportunity costs of resources provided by the entrepreneur






50. Holding all else equal - when the price of a good rises - consumers decrease their quantity demanded for that good